HP 2006 Annual Report Download - page 99

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HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Note 4: Balance Sheet Details (Continued)
Other Liabilities
2006 2005
In millions
Pension, post-retirement, and post-employment liabilities ..................... $2,099 $2,515
Long-term deferred revenue .......................................... 1,750 1,331
Other long-term liabilities ............................................ 1,648 1,443
$5,497 $5,289
Note 5: Supplemental Cash Flow Information
Supplemental cash flow information was as follows for the following fiscal years ended October 31:
2006 2005 2004
In millions
Cash paid for income taxes, net ..................................... $637 $884 $609
Cash paid for interest ............................................ $299 $447 $305
Non-cash investing and financing activities:
Net issuances of restricted stock and other employee stock benefits ......... $ 40 $137 $ 68
Issuance of common stock and options assumed in business acquisitions ...... $ 13 $ 12 $ 15
Purchase of assets under capital leases .............................. $ 19 $ — $ —
Note 6: Acquisitions
HP has recorded acquisitions using the purchase method of accounting and, accordingly, included
the results of operations in HP’s consolidated results as of the date of each acquisition. HP allocates
the purchase price of its acquisitions to the tangible assets, liabilities and intangible assets acquired,
including in-process research and development (‘‘IPR&D’’), based on their estimated fair values. The
excess purchase price over those fair values is recorded as goodwill. The fair value assigned to assets
acquired is based on valuations using management’s estimates and assumptions. HP does not expect
goodwill recorded on a majority of these acquisitions to be deductible for tax purposes.
Peregrine
On December 19, 2005, HP acquired the outstanding shares of Peregrine Systems, Inc.
(‘‘Peregrine’’) in a cash merger for $26.08 per share. The purchase price was approximately
$538 million, consisting of $442 million of cash paid, which includes direct transaction costs, as well as
the assumption of certain liabilities in connection with the transaction. The acquisition of Peregrine
adds key asset and service management components to the HP OpenView portfolio, a distributed
management software suite for business operations and IT. In connection with this acquisition, HP
recorded approximately $342 million of goodwill and $162 million of amortizable intangible assets. HP
also expensed $34 million for IPR&D. HP is amortizing the purchased intangibles, principally customer
relationships and developed technology, on a straight-line basis over their estimated useful lives ranging
from five to six years.
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